Premier Kosher, the southern Ontario company that won the right to produce kosher poultry and began selling in Ontario last year, is being sued for $1.3 million for breach of contract by the company it had hired to provide kosher certification of its products.
Agudas Shomrei Hadas Jewish Community Services Inc. (Agudas) alleges that Premier Kosher and its president and sole director, Paul Tzellos, wrongfully terminated a five-year contract on or around Dec. 7, only a little more than a year after signing the agreement.
In a statement of claim filed on Jan. 2, Agudas alleges that the contract allowed for early termination by either party with six months written notice. Agudas claims, however, that in December, “Premier purported to immediately terminate the agreement. In breach of the agreement, Premier failed to give the required notice. In fact, no notice at all was given by Premier to Agudas.”
Agudas alleges that in addition to violating the terms of the contract, “Premier owed Agudas a general duty of good faith to provide reasonable notice of any termination of the agreement. The defendants (Premier and Tzellos) knew that this agreement was the primary source of income for Agudas.”
Premier and Tzellos have up to 30 days to respond to the suit. None of the allegations have been proven in court.
Premier’s involvement in the kosher chicken industry dates back at least two years. In March 2016, Chicken Farmers of Ontario (CFO), an agency that oversees the production and marketing of chickens in Ontario, granted Premier the right to produce kosher chickens in the province. Premier’s bid was chosen over at least half a dozen others.
READ: FLEDGLING CHICKEN SUPPLIER ABRUPTLY SWITCHES KOSHER SUPERVISORS
At the time, Premier announced that the Kashruth Council of Canada, better known as COR, would provide kosher supervision of its operations. However, when Premier finally began distributing its chickens in March 2018, kashrut certification was being provided by Agudas.
Agudas Shomrei Hadas is led by three prominent Orthodox rabbis in Toronto: Rabbi Mordechai Ochs, a member of the Beis Din (rabbinic court) of the Orthodox Vaad Harabonim; Rabbi Dovid Schochet, president of the Toronto Rabbinical Council and a member of Vaad Rabbonei Lubavitch; and Rabbi Moshe Lowy of Agudat Yisrael, who’s also a judge in the Toronto Beis Din.
When Premier began selling its chickens in March, Philip Davidovits, a spokesman for Agudas, said the organization had been helping Tzellos prepare his plant for a year.
According to the statement of claim, Agudas was to manage the kosher requirements of Premier’s southern Ontario plant and hire kosher inspection personnel. In exchange, Premier was to pay Agudas every two weeks the greater of 25 cents per bird, or the cost of all the kashrut staff plus $1,750.
Tzellos told The CJN last year that he expected the plant to produce 50,000 birds per week when it was operating at maximum capacity. Using the 25 cents per bird calculation, that would translate into $25,000 paid to Agudas biweekly, or $650,000 per year.
Agudas declined to comment about the case, saying through a spokesman that it would not do so while the case is before the courts. Tzellos did not respond to The CJN’s request for comment.
However, on Dec. 5, Premier issued a press release announcing it was switching its kashrut supervision from Agudas to COR.
“As Premier Kosher continues to grow and pursue greater opportunities, we need a nationally recognized kosher certifier who is able to take us to the next level and service the needs of kosher consumers across the country. That is why we approached the Kashruth Council of Canada and ultimately obtained COR certification,” Premier stated in the news release.
“Kashruth Council of Canada will help us broaden the reach and reliability (of) the Premier Kosher brand. Premier Kosher remains committed to providing superior quality kosher chicken at a high kosher standard.”
The move seemed to catch Agudas by surprise. The organization responded to Premier’s announcement by issuing a statement of its own: “Without our consultation or consent, the COR have taken over supervision of Premier chickens. Thank God we raised the standard of kashrut and the quality of the product while lowering the price to a reasonable level. We bear no responsibility that these benefits will continue.”
According to Agudas’ statement of claim, “unbeknown to Agudas, the defendants (Premier and Tzellos) had been negotiating for a period of months prior to December of 2018 with another certifier, the Kashruth Council of Canada, and then entered into an agreement with COR to take over from Agudas. Premier breached the duty of good faith and fair dealing it owed to Agudas.”
Agudas claims that as a result of Premier’s alleged breach of contract and of its alleged breach of good faith, “Agudas has suffered and will continue to suffer damages and harm for which Premier is liable. The particulars of this harm include lost future revenue and profit and loss of goodwill.”
Agudas further alleges that “Premier’s deliberate and unlawful course of conduct … was done with malice and to obtain a private advantage. Premier’s conduct was wilful and egregious. Premier was aware of the adverse impact its conduct would have on Agudas.”
Agudas is seeking $700,000 for breach of contract, $150,000 in special damages, $200,000 in aggravated and exemplary damages, and $250,000 in punitive damages.